Intra-group transactions on depreciable assets and Assoiciates

Hi

In the first problem, the pup to be adjusted in the associate is NOT 30% 8 30k = 9
The correct pup adjustment to be made in A’s books is 30.

Then when you take H’s share of the Associate’s post acq profits, you’ll find that your answer comes out the same as the FTCK method

Hoowever, the second problem causes me a problem too! Your workings are correct, and the answers are different. The FTCK method looks at the net unrealised profit whereas my way ollks at the unrealised profit and the related affect on the depreciation charge.

Conceptually, the FTCK method makes no sense at all. The parent HAS recorded an unrealised profit of 400 and the subsidiary’s profits HAVE suffered by the excess depreciation charge. It’s the only solution which makes any sense

Hope that helps

Thanks Ambitious! I’ve just posted an explanatory message on the “other” string